Stabilizing effects and potential risks of agricultural futures markets in Brazil
Prof. Dr. Barbara Fritz, FU Berlin; Prof. Dr. Sebastian Dullien, HTW Berlin
Despite the widely agreed importance of futures markets for agricultural development, there is still a high degree of uncertainty and disagreement regarding its implications and functioning. During the last decade food price volatility has greatly increased and a worldwide academic debate on whether financial activities on futures markets have had an impact on spot prices has emerged. So far, no consensus has been found and there is disagreement on whether the introduction of regulation would stabilize or destabilize the markets. The approach of the present project is that regulation needs to be introduced in a correctly targeted way and that a differentiation between different types of speculators is required. Therefore, the research project analyses the role of futures markets for the price discovery process on agricultural markets in Brazil and aims to identify actors whose trading strategies bear the risk of increasing spot price volatility.